Pearls, Finer but Still Cheap, Flow From China

One of the most feared men in the worldwide pearl industry these days is a muscular, Ferrari-driving 40-year-old who is doing the improbable: growing pearls that are nearing the highest quality and may be affordable for middle-class Americans.

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The man, Zhan Weijian, runs a large company in the emerging capital of the world’s freshwater pearl farming industry, and it is far from Tahiti and other traditional saltwater pearl havens in the Pacific. Mr. Zhan works here in east-central China, where his white pearls cost a fraction of the saltwater variety.

Wholesale prices for half-inch white pearls have fallen about 30 percent in the last several years, as the influx of high-quality Chinese farmed pearls — grown in former rice fields — has the industry in turmoil.

For two decades, China has been the world’s biggest pearl producer, flooding the market with small and cheap pearls of costume-jewelry quality. But now companies like Mr. Zhan’s are using new techniques to push into the lower reaches of the market for half- to almost one-inch gem-quality pearls.

“Competition from China has hurt, there’s no doubt,” said Robert Wan, whose company, Robert Wan Tahiti, dominates the production of Tahitian pearls, which are cultured in mollusks in saltwater and help set the world quality standard.

“Prices are soft,” Mr. Wan said, “and if in one or two years, they have a huge increase in supply, we will see what happens.”

China’s pearl industry is a microcosm of how the country is moving beyond low-wage jobs and imitating foreign producers. Pearl farms, like other businesses across China, are starting to innovate and automate as wages surge, particularly for blue-collar workers.

“The U.S. has worried about China producing cheap goods — they really should be worried about China producing better goods,” said Bruce Rockowitz, the chief executive of Li & Fung , the largest trading company supplying Chinese consumer goods to American retail chains.

A Chinese half-inch pearl now sells for $4 to $8 at wholesale, which is typically less than half of the retail price. A Tahitian pearl of similar size sells at wholesale for $25 to $35.

The price gap reflects lingering differences in hue and luster. It does not take a jeweler to discern those differences when Chinese pearls are placed next to saltwater pearls.

Joel Schechter, the chief executive of Honora, one of the biggest Manhattan-based importers of Chinese pearls, recently walked into the steel vault at his offices just off Madison Avenue and selected two costly strands of some of his best, blemish-free, half-inch pearls.

The strand from Tahiti, with a wholesale price of $14,000 without the clasp, gleamed silvery white in his hand. Next to it, a strand from China also glistened with perfectly round, blemish-free pearls, but they had a more chalky hue.

At $1,800 wholesale, the Chinese strand also had a much less lustrous price. China’s arrival in this segment of the market, Mr. Schechter said, “has made pearls affordable for the average working woman.”

Mr. Zhan, the man who has grown ever richer on cheaper pearls, is chief executive of Grace Pearl, one of the largest companies in Zhuji, a town in Zhejiang Province. Grace grows pearls in Zhejiang and, as real estate and labor costs have risen, also in inland Jiangxi, Hunan, Anhui and Hubei Provinces.

Mr. Zhan picked up a visitor to Zhuji in his chauffeured brown Maserati Quattroporte sedan.

“When I drive myself, I prefer the Ferrari 360, it’s more fun,” he explained on the way to dinner. The meal included a soup made from wild lake turtle, a delicacy that has become increasingly rare. More people in this part of China can now afford the delicacy, and that has led to overfishing.

While he was happy with the reception Grace’s half-inch white pearls were receiving, Mr. Zhan seemed more proud of an innovation he called Edison pearls — orbs that come in vivid purple, pink and bronze, bright hues seldom seen before except in dyed pearls, and in sizes of up to three-quarters of an inch.

Although he and Grace closely guard their techniques, Mr. Zhan said they saw the Edison as emblematic of the growing scientific and technological sophistication of Chinese pearl making. He named them for Thomas Edison, even if it seemed a back-handed homage.

“Edison, for all his intelligence,” Mr. Zhan said, “could not invent pearls or diamonds.”

Grace has been working closely with Zhejiang University in an effort to sequence the entire genome of the mussels that freshwater pearls are grown in, hoping to use the information to develop even better pearls.

Mr. Zhan refused to identify which of his pearl farms were raising Edisons, except to say that none was near Zhuji, where information tends to spread quickly to competitors.

Zhan Yi, a senior Grace executive, stood next to a placid pearl pond near Zhuji the next morning and watched as workers earning $15 to $23 a day sat on benches at a long table. Using tweezers, they inserted tiny pieces of mussel tissue inside live mussels’ shells. The pearls develop around the tissue and may take four years to reach full size.

For Edison pearls, mussels selected through genetic research are implanted with tiny beads instead of mussel tissue, Zhan Yi said. The beads are inserted through a special method that the company will not reveal.

Companies like Grace are turning to automation because labor can add up to a third of the cost of raising pearls and then matching by hand literally tons of pearls by size, color, shape and blemishes.

Blue-collar wages have nearly doubled in Zhuji and some other coastal areas in the last three years, as fewer young Chinese are willing to settle for the monotony of factory life, choosing to attend universities instead.

What is more, older pearl workers frequently lose the necessary skills and are quickly disappearing.

“They work until they are 37 and then their eyesight goes” from years of squinting at pearls under fluorescent lights, said Qiu Xian, the research director at Grace.

Mr. Qiu showed off experimental armoire-sized sorting machines that he had designed. Each machine drops a pearl every few seconds and photographs it from several different directions as it falls. The machine instantly evaluates the photos, then catches the pearl and assigns it a trough to roll into a bin of similar pearls.

Each of the machines can run 24 hours a day, Mr. Qiu said, and will replace 15 workers.